Illustrative image (Photo: VNA) Hanoi (VNA) – Vietnam’s GDP growth forecast forthis year has been lowered to 2-2.5 percent, according to the World Bank's October 2021 Vietnam Macro Monitoring.
Vietnam's GDP in the third quarter of 2021decreased by 6.2 percent from the same period last year, the sharpest declinesince Vietnam announced its quarterly GDP, the WB estimated.
Given the sharp contractionof the GDP in the third quarter and depending on the strength of the economicrebound in the fourth quarter, GDP growth for 2021 is projected to be in the 2percent to 2.5 percent range, well below the WB's August forecast of 4.8 percent, itsaid.
Labour market conditionsworsened substantially, reflecting the adverse economic impacts of the lengthylockdown in major economic centres.
Illustrative image (Photo: VNA) As the number of new COVID-19infections started to fall, Hanoi and several provinces eased stringentrestrictions so that mobility, industrial production index and retail salesstarted to recover although they remained lower than a year ago.
The merchandise trade balanceimproved as import growth slowed while foreign direct investment (FDI) commitment grew for a third month,suggesting foreign investors remain confident in the longer-term potential ofthe economy.
Inflation remained subduedamid weak domestic demand while the Vietnamese dong experienced further nominalappreciation in the domestic official market. Credit growth decelerated due toweakening credit demand associated with slower economic activities but wascomparable to pre-pandemic rates as banks continued to provide preferentialloans and forbearance to support businesses affected by the pandemic, accordingto the WB.
The year-on-year budget balance remained in surplus over thepast nine months despite posting another monthly deficit in September, mainlydriven by a sharp fall in revenues. The resumption of economic activities aftera prolonged social distancing is facing obstacles as can be seen from theexperiences of other countries in the world. Reactivating manufacturingfactories and businesses in the services sector will face potential product andlabour shortages, it said.
To ease logistical constraints,the WB recommended that the Government of Vietnam continue testing and vaccinationon a large scale and encouraging labour mobility should be prioritised.
The authorities should also adopt a more expansionary fiscalpolicy and use the various fiscal tools available to support the economicrebound, including easing procedural rigidities in the budget to spend theplanned current budget, accelerating the implementation of planned public investment,and expanding social protection to households and to formal and informalworkers, it said./.
